The government provides the settlers with cheap land, discounted loans, tax breaks and other aid.

Dreams of Land Collide as Israeli Settlers Grow
Palestinians in the village of Singil can see the outpost from their terraces. To them, it makes no difference that such settlements are not officially sanctioned by the Israeli government. Their land is disappearing, the villagers say, and only the settlers have the army on their side.

"The Jews here believe they have been chosen by God and that we are animals," said Khaled Hussein, 35, a stonecutter in Singil. "They are coming closer all the time. Now, I think, there are only two possibilities: either Israel will destroy us, or we will destroy Israel."

Settlements like Givat Eshkodesh are at the epicenter of the consuming rage in the Middle East, as two dreams of land collide with renewed intensity in the occupied territories of the West Bank and the Gaza Strip.

[On July 1, the Israeli Defense Ministry announced the dismantling of 11 small settler outposts, all but 2 of which were uninhabited. Defense officials said 9 more of the illegal outposts, which they would not name, would be removed in the coming weeks.]

But despite repeated Israeli pledges to halt their expansion, the occasional evacuation of outposts and sporadic appeals from the United States, the settlements have grown steadily. Although the number of recognized settlements has remained fairly stable in recent years, their population in the West Bank has about doubled over the last decade, rising from 100,500 in 1992 to an estimated 198,000 last year, according to official figures.

Behind the growth, officials and analysts said, lies an elaborate system of government incentives and a powerful network of political support. The government provides the settlers with cheap land, discounted loans, tax breaks and other aid. The settlers, in turn, have become a potent constituency of the right-wing political parties that support them — a force powerful enough to command the actions of important ministers or to destabilize government coalitions.

Israeli policy has largely been shaped by the most militant settlers, Jews who occupy land they believed was deeded to them in the Bible. But as the incentive system has evolved, officials said, it has steadily lured more and more secular families looking for affordable suburban homes.

How much Israel spends to sustain and defend the settlements remains a closely held secret. Estimates run upward of $1 billion a year, including security costs, even as the country struggles with its most severe economic crisis in decades.

A former finance minister, Avraham Shochat, calculated the cost of the government's incentive system at perhaps $400 million. Based on supplemental defense appropriations since the Palestinian uprising, or intifada, began in September 2000, he estimated that the security forces are also spending more than $1 billion in additional funds each year, part of it to protect the settlements.

…American officials say that Israel's settlement machine stands as one of their most formidable obstacles. The sharp rise of the settler population over the last decade has come despite Israel's vow, under the Oslo peace negotiations, not to "change the status" of the occupied territories pending final negotiations.

Israeli governments have pledged repeatedly to stop building new settlements, insisting that any expansion of those in place (now about 125 in the West Bank and 10 more in the Gaza Strip) would be limited to the "natural growth" of the population. But while the West Bank settlement population grew at an annual rate of about 8 percent over the last decade, the birth rate alone would have caused an annual increase of only 3.1 percent, analysts said.

Until recently, the government of Prime Minister Ariel Sharon has also shown tolerance for the outposts — the clusters of trailer homes that sprout among Palestinian villages in the West Bank regions that the settlers call Judea and Samaria. According to the advocacy groups that monitor them, about 40 new outposts have appeared since Mr. Sharon took office in February 2001.

In Givat Eshkodesh, which was forcibly evacuated during peace efforts three years ago and remains unauthorized, signs of official support are now everywhere: new electrical lines, a new government-built road, and a flush confidence among the settlers that the country is again behind them.

Despite new fiscal austerity, his government has maintained the flow of incentives and subsidies, cutting bus fares, bulletproofing settlers' cars and financing activities for children who can no longer travel safely outside their communities.

The government is also taking at least an indirect role in promoting the settlements to new immigrants. Although Israeli policy is to allow new immigrants to live wherever they choose, several officials acknowledged privately that government-financed agencies are helping the settlements to market themselves to prospective immigrants.

The government's aid to the settlements is difficult to trace because much of it moves through complex bureaucratic conduits or is hidden in vaguely described budget items. Housing support, for example, might be spread across both settlement communities and other "national priority areas" like the Negev Desert.

There is little question, though, that such support has been the will of the prime minister and his Likud Party, of which settlers are an important constituency. As agriculture minister in the late 1970's, Mr. Sharon called for the settlement of two million Jews in the territories by the year 2000. As foreign minister in 1998, he called on settlers to "grab hilltops" before they were ceded to the Palestinians in negotiations.
http://www.nytimes.com/2002/07/03/international/middleeast/03SETT.html?pagewanted=all&position=top